Bid Protests and Disputes

Since 2006, the number of bid protest filed with the Government Accountability Office (“GAO”) has nearly doubled from approximately 1,300 protest filed in 2006 to over 2,400 filed in 2012.

Many, including the former head of the Office of Federal Procurement Policy, believe bid protests are worth it. Among chief factors that lead many to believe that a protests are warranted:

The relatively low cost to file a protest with Government Accountability Office (GAO);

An over 40% chance of that the protester will obtain some form of relief; and

The potential to receive a partial or full award of your attorneys fees costs incurred in bringing the protest.

Where: Disappointed bidders on a contract being let by a federal government agency have a choice of filing a bid protest in four different places: (1) the agency giving the award; (2) the GAO; (3) the Court of Federal Claims; and (4) the disappointed bidders local federal district court.

Each forum has it pros and cons. However, the GAO is by far the most popular forum for filing a bid protest on a federal contract award because of the detailed rules for hearing and the speed at which the matter is disposed of. Indeed, the GAO will rule on a bid protest within 100 days of a protest being filed with it. Moreover, with few exceptions, a claim filed with the GAO results in an automatic stay of award of the contract subject to the dispute.

When: A post-award bid protest must be filed with the GAO within ten (10) days. While there is no set time frame for filing a bid protest with either the Court of Federal Claims or a local federal district court, because bid protest filed there seek preliminary injunctive relief, they should be filed as soon as possible. In fact, any delay in filing a bid protest with the federal court may result in the claim being denied.

Sports fans are familiar with the scenario. A team stands only seconds away from victory. It is so close many are already celebrating. Suddenly, fate intervenes and a ball bounces off a glove, a half court shot swishes through the net, or a receiver catches a heaved touchdown pass. That is what the losing team calls: snatching defeat from the jaws of victory.

Snatching defeat from the jaws of victory could also be used to describe the circumstances of a recently decided Pennsylvania Commonwealth Court decision in Allan A. Myers, LP v. Montgomery County. The case involved the award of a county road paving contract. Allan A. Myers was the apparent low bidder and winner of the contract. In fact, the County Commissioners passed a resolution announcing that Myers was the low bidder and awarded the contract to it.

However, before the paving contract could be formerly signed, the County entertained a bid protest from a disappointed bidder. As a result of the protest, the County Commissioners adopted another resolution. This one rescinded the prior resolution awarding the contract to Myers and awarding the contract now to the disgruntled bidder.

Not surprisingly, litigation ensued. The trial court dismissed Myers’ case stating that as a matter of law “the mere act of awarding a public contract normally creates no binding obligation on the awarding entity without the proper contracting authorities going further and entering into and executing the contract.”

Myers appealed and argued that, under basic public contract principles, an enforceable contract existed when the County awarded the contract to Myers in the resolution. The Commonwealth Court disagreed and affirmed the trial court’s dismissal of Myers’ action. The Commonwealth Court explained that “where a statute prescribes the formal mode of making public contracts it must be observed, otherwise they cannot be enforced against the government agency involved.”

Looking to the statute governing the award of the paving contract, the Commonwealth Court reasoned that the language indicated that the Legislature intended that all contract be executed in order to be enforceable.

The take away. Before you start celebrating a bid award, if the statute governing the award of your contract requires it to be executed to be enforceable, bird dog the government agency to get you that executed contract.

A recent Pennsylvania Commonwealth Court decision underscores how even a minor bid specification ambiguity can lead to a significant bid challenge.

In Greenstar Pittsburgh LLC v. Allegheny County, the Commonwealth Court considered whether the following section of a bid specification was ambiguous, thereby creating an uneven bidding playing field:

“The Contractor’s facility shall be located within a fifteen (15) mile radius from the City’s Department of Public Works … located at 30th and A.V.R.R.”

In the case, Greenstar, a disappointed bidder and individual taxpayer brought suit to enjoin the award of a contract for the processing of recycling materials. Greenstar challenged the award of the contract to PRS, the apparent lowest responsible bidder, on the grounds that three sections of the bid specifications were ambiguous and gave PRS an unfair advantage in the bidding process.

In part, Greenstar claimed the term “facility” was open to two reasonable interpretations. It claimed that facility could mean its home office or a processing site. The trial court agreed and enjoined the award of the contract to PRS. On appeal, the Commonwealth Court affirmed and the contract award remained enjoined.

The Commonwealth Court explained that “if a provision in bidding specifications denies the public the benefit of a fair and just competitive process by which the public authority can select the lowest responsible responsive bidder due to its ambiguity, the only remedy is to enjoin performance of the contract between the successful bidder and the public authority.” The rationale underlying this principle is that “fairness lies at the heart of the bidding process, and all bidders must be confronted with the same requirements and be given the same fair opportunity to bid in free competition with each other.”

The definition of the term “facility” is not one that most bidders would likely seize on in attacking bid award. Usually, contractors focus on ambiguities involving some portion of the bid itself, like a unit price or other line item. Greenstar raises the question as to whether disappointed bidders should look elsewhere in the bid specification to challenge an award. Surely, in every bid specification there exists one, if not several instances, of minor ambiguities that a disappointed bidder could use to challenge a bid award.

The lesson: if you want to challenge a bid, look beyond the obvious ambiguities.

The GAO recently published a report summarizing bid protest decision from the GAO for 2012. Of the several interesting statistics in the report, one jumps out 42% of all GAO bid protest result in some form of relief being awarded to the protester A copy of the report can be found here: GAO Bid Protest

About the Author

Wally represents contractors (and subcontractors) and developers. His clients build and develop residential, commercial, and industrial properties nationwide. Wally enjoys working with the owners of the businesses he represents because they tend to be entrepreneurs and all around interesting people.